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Congress' New Tax Overhaul

August 25, 1986

I am compelled to write you regarding the replacement of the present income tax law. The old law has flaws but it contains 70 years of congressional haggling, bargaining, and horse trading. A great many of the deductions allowed in the present law were put there specifically to improve the well being of the country.

I believe that the proposed law is patently unfair to everyone except the very poor, those who cheat on their income taxes anyway, and the sacred-cow oil industry.

The existing tax code should be pinpoint-bombed, not totally thrown out. Investment tax credits are needed to spur our sagging blue-collar industries and should not be eliminated at a time when our industries are in a state of near depression. I believe instead that credits should only be given on products that contain 90% U.S.A.-produced parts and 100% U.S.A. labor.

In a day of $230-billion budget deficits, it seems that putting so much congressional time and effort into a revenue-neutral bill is insane. I think new revenues are needed along the lines of recent federal tax increases, such as the cigarette tax, liquor tax, and 5 cents per gallon gas tax.

Raise or create another tax instead of scrapping the present law. I say put a sales tax of 6% or more on corporate mergers. When a raider or highly profitable (probably non-taxpaying) corporation wants to take over another corporation, charge the buyer a 6% sales tax the same way most citizens pay state sales tax when they buy something. This would put a possibility of tax on some corporations that earn tremendous incomes but escape tax legally through deductions allowed in the present law. Public or large corporations earning $1 million or more in gross income should pay a minimum of 10% of the gross income or the calculated tax whichever is higher.

Congress has based the new law on income projections they have been guessing at for the past five or six years. Their projections have been based mostly on optimistic prognostications that have almost always been wrong. Recently, they admitted the deficit was $30 billion more than their earlier guess of $200 billion. I think the new tax law is very ill-conceived, ill-advised, and will not work.

WILLIAM E. PATTON

Walnut Creek

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